India decision against Safta spirit
It is important to inform India that Bangladesh also can retaliate in response to these rules and if it does that will result in losses for both the parties
The South Asian Free Trade Agreement (Safta) allows the institutions concerned in the exporting countries to issue certificates of origin and the importing countries provide duty-free access to those products based on those.
Bangladeshi products have thus far enjoyed duty-free access to India under this mutual recognition.
If India had any concerns regarding this, it could have discussed those with Bangladesh. But the country did not do so. Instead, it has put in force a new set of rules entitling customs officers with supreme power, which might hamper Bangladesh's imports.
Now Indian customs officials can cancel the duty-free access facility for any product. This does not go with the spirit of Safta.
The Indian customs will be able to levy anti-dumping duty on Bangladeshi products based on the information collected from Bangladeshi exporters through their importers.
Earlier, India had also imposed anti-dumping duties on jute products, but, in doing so, the country did not take any account from Bangladesh – it calculated and imposed this duty unilaterally.
Under the new rules, there is a risk of imposing this duty on various products of a company after collecting the production cost of those products.
Through bilateral platforms, the Bangladesh government has to let India know that the new rules are not in line with Safta and that Bangladesh is concerned about this.
It is important to inform India that Bangladesh also can retaliate in response to these rules and if it does that will result in losses for both the parties.
Diplomatic efforts must continue to ensure that India complies with the provisions of Safta.
It is also important for exporters to keep accurate accounts so that they can present the information if needed. Bangladeshi exporters also have some shortcomings in this regard, which need to be addressed. This requires preparation.
Dr Mustafizur Rahman is a distinguished fellow at CPD and he gave his opinion to The Business Standard reporter Abul Kashem over the phone.
